In a recent settlement, Merck has agreed to pay $5.9 million to settle claims it unlawfully marketed its conjunctivitis drug, AzaSite.

When reimbursing for prescription medication, agencies like Medicare and Medicaid are only permitted to pay claims for drugs that are prescribed for their approved use. When a doctor or pharmaceutical company prescribes or promotes a drug for an unapproved use, subsequent invoices for reimbursement could trigger False Claims Act liability.

In today’s case, we look at a recent settlement between drug giant Merck and the Department of Justice involving unlawful marketing tactics for its top-selling conjunctivitis drug, AsaZite. [1. Department of Justice Press Release, “Manhattan U.S. Attorney Settles Civil Fraud Claims Against Inspire Pharmaceuticals, Inc. For Its Misleading Marketing Designed To Cause Prescriptions Of Azasite For Non-Fda Approved Uses.” June 17, 2015. http://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-settles-civil-fraud-claims-against-inspire-pharmaceuticals-inc] The $5.9 million settlement settles claims raised by a whistleblower. However, the amount of the whistleblower’s reward was not made publicly available at the time of the Department of Justice’s announcement.

Details of the claims against Merck

The concept of off-label marketing has been a hotly contested and highly debated issue within the healthcare industry, particularly in light of the False Claims Act. As explained above, off-label marketing occurs when a drug is promoted and prescribed to treat a condition not studied and approved by the FDA, thereby putting users in danger of unexpected and unknown side effects.

Proponents of off-label marketing argue that prohibiting the practice amounts to a violation of the First Amendment and a company’s right to free speech and advertising. However, in the eyes of the federal government, only approved uses are reimbursable and any attempt to seek repayment otherwise could be actionable.

Here, a former subsidiary of Merck known as Inspire is alleged to have promoted its ocular drug AzaSite for the treatment of a condition known as blepharitis, a condition which causes swelling and inflammation of the eyelids. However, AzaSite was studied and approved solely for the treatment of conjunctivitis (i.e., pink eye), which is a bacterial infection of the eye requiring antibiotics to treat.

According to the whistleblower – a former sales manager for Inspire – marketing AzaSite for the treatment of a non-bacterial infection was gratuitous, as blepharitis is commonly treated with home remedies, such as a warm compress or gentle cleansing. Nonetheless, the company aggressively marketed the drug as effective against the condition and made a substantial profit therefrom.

Forty-eight states participated in the settlement since state-processed Medicaid claims were also involved in the alleged misconduct. [2. Press Release, “A.G. Schneiderman Announces $6 Million Settlement With Illinois-Based Inspire Pharmaceuticals For Illegal Off Label Marketing.” June 18, 2015. http://www.ag.ny.gov/press-release/ag-schneiderman-announces-6-million-settlement-illinois-based-inspire-pharmaceuticals]

In a comment by Merck, it reiterated that it was “glad to put this behind us.” Connecticut attorney general Jack Conaway remarked, “Patients have a right to trust they are being prescribed properly tested and effective medicine….Pharmaceutical companies like Inspire will not be permitted to skirt FDA rules and regulations to make a profit at the expense of patients. These FDA rules are enforced to ensure patients are only prescribed drugs that are proven to benefit the patient.”[3. Press Release, “Attorney General Conway Announces Settlement with Inspire Pharmaceuticals.” June 18, 2015. http://kentucky.gov/Pages/Activity-Stream.aspx?viewMode=ViewDetailInNewPage&eventID=%7B74654A1D-6226-4C02-AFFD-07D128EE5A5C%7D&activityType=PressRelease]

Contact Berger Montague today

If you are aware of costly healthcare fraud at your place of employment or believe off-label marketing may be ongoing, please do not hesitate to contact Berger Montague right away.